(Bloomberg) — Russian seaborne oil supplies continue to fall steadily, driven by a large loss of barrels from Russia’s terminal on the Asian island of Sakhalin.
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The country’s four-week average crude exports fell slightly in the week to August 18, down 25,000 barrels per day from the previous period. Weekly deliveries, which are much more volatile, fell 360,000 barrels per day. The volumes are almost 500,000 barrels per day below an April peak.
The drop comes ahead of a plan by several OPEC+ members, including Russia, to ease production cuts starting in October. A decision on whether to continue with those increases could come in early September as prices fall amid concerns about global demand.
While pipeline shipments of ESPO crude to the Pacific terminal in Kozmino are booming, flows from two projects offshore Russia’s Sakhalin Island have slowed. Eleven Sokol cargoes have been exported since early July, compared with 13 in each of the two previous seven-week periods. Only two shipments have been made from the Sakhalin 2 project in the past eight weeks. Until late June, the project was sending that amount every three weeks.
Russian oil refineries ramped up production in the first half of August. If the processing rate holds throughout the month, it will be the highest average monthly level since July 2023.
Russia continues to put some of its sanctioned tankers back to work. The Belgorod and Bratsk, which have already shipped one cargo while under U.S. sanctions, took on a second load in Novorossiysk this month. Their previous loads were offloaded to the supertanker Oxis in the Gulf of Oman and are now docked at the Chinese port of Dalian. The Liberty, formerly NS Laguna, has loaded a cargo in Primorsk and the Nevskiy Prospect is scheduled to dock there today.
Crude oil deliveries
A total of 27 tankers loaded 20.54 million barrels of Russian crude in the week to Aug. 18, vessel tracking data and port agency reports showed, down from 23.04 million barrels on 30 vessels the week before.
That meant daily Russian seaborne crude flows fell by about 360,000 barrels to 2.93 million in the week to August 18, the second straight weekly decline. The drop in weekly flows was the largest since early July and took deliveries to the third lowest level recorded this year.
Despite the sharp drop, the less volatile four-week average fell only 25,000 barrels a day to 3.2 million, from a revised 3.22 million the week before. That measure had risen 80,000 barrels a day the week before.
Crude oil deliveries so far this year are about 40,000 barrels per day below the average for all of 2023.
Russia ended its export targets in late May, opting instead to cut production, in line with its partners in the OPEC+ oil producer group. The country’s output target is set at 8.978 million barrels per day through the end of September, after which it is expected to rise by 39,000 barrels per day per month through September 2025, as long as market conditions allow. A decision on whether to continue easing the cuts is expected early next month.
Moscow has also pledged to further cut production in October and November this year, and then between March and September 2025, to compensate for oil output above the OPEC+ quota from earlier this year.
Deliveries from the Sakhalin 2 project are expected to recover in the coming weeks. The project was shut down for a month in early July for maintenance work on both oil and liquefied natural gas facilities. Production resumed in early August, the operator said in a statement. One of the project’s three shuttle tankers remains out of service and a ship is being transferred from the Sakhalin 1 project, according to vessel tracking data compiled by Bloomberg.
During the week, two cargoes of Kazakh KEBCO crude oil were loaded in Novorossiysk.
Flows by destination
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Asia
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Observed deliveries to Russian Asian customers, including those without a final destination, fell slightly to 2.94 million barrels per day in the four weeks to August 18, about 9% below the average level in April.
About 1.22 million barrels per day of crude oil were loaded onto tankers bound for China. The Asian country’s overseas imports are bolstered by about 800,000 barrels per day of crude oil coming in via pipelines from Russia, either directly or via Kazakhstan.
Oil flows on ships calling at Indian destinations averaged 1.41 million barrels per day, down from a revised 1.53 million for the period through Aug. 11.
Both the Chinese and Indian figures are likely to rise as discharge ports become clearer for vessels that currently do not specify final destinations.
The equivalent of about 250,000 barrels a day were on ships calling at Port Said or Suez in Egypt. Those voyages typically end at ports in India or China and appear as “Unknown Asia” until a final destination becomes clear.
The volumes of “Other unknowns,” which stood at around 30,000 barrels per day in the four weeks to August 18, are those on tankers that have no clear destination. Most come from Russia’s western ports and pass through the Suez Canal, but some may end up in Turkey. Others may be shifted from one vessel to another, with most such transfers now taking place in the Mediterranean, most recently off Egypt or near Sohar in Oman.
Russian oil flows continue to be hampered by the Greek navy conducting exercises in an area linked to the transfer of Russian crude. These naval exercises have now been extended until 15 September. As a result, cargo changes have been moved to the waters off the Egyptian port of Said, where two Suezmax cargoes were transferred to a larger ship for shipment to Asia via the Cape of Good Hope.
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Europe and Turkey
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Russia’s overseas crude exports to European countries have stalled, with flows to Bulgaria halted late last year. Moscow also lost about 500,000 barrels per day of pipeline exports to Poland and Germany at the start of 2023, when those countries halted purchases.
Turkey is now the only market for short-haul shipments from Russia’s western ports. Flows in the 28 days through August 18 were virtually unchanged at around 260,000 barrels per day, the lowest level since February.
Exports to Turkey fell by about 30% compared to the average level between end-February and end-June.
Export value
The gross value of Russian crude exports fell to $1.47 billion in the seven days ended Aug. 18, from $1.56 billion in the period ended Aug. 11. The lower weekly flows were partly offset by the first weekly price increase for key Russian crude flows in six weeks.
Export values at Baltic and Black Sea ports rose by about $3.50 a barrel week-on-week, while key Pacific grade ESPO rose by about $4 a barrel. Delivered prices in India also rose, by about $3.50 a barrel, all according to Argus Media figures.
The four-week average income changed little, at about $1.58 billion per week. The peak of the four-week average of $2.17 billion per week was reached in the period ending June 19, 2022.
In the first four weeks after the G7 countries put a price cap on Russian crude oil in early December 2022, the value of overseas flows fell to a low of $930 million per week, but quickly recovered.
NOTES
This story is part of a weekly series tracking crude oil deliveries from Russian export terminals and the gross value of those flows. The next update will be on Tuesday, August 27.
All figures exclude cargoes identified as Kazakhstan’s KEBCO class. These are shipments of KazTransoil JSC that transit Russia for export via Novorossiysk and Ust-Luga and are not subject to European Union sanctions or a price cap. The Kazakh barrels are blended with Russian-origin crude to create a uniform export flow. Since the Russian invasion of Ukraine, Kazakhstan has relabeled its cargoes to distinguish them from those shipped by Russian companies.
Vessel tracking data is compared with reports from port agents and with flows and vessel movements reported by other information providers, including Kpler and Vortexa Ltd.
If you are reading this story on the Bloomberg terminal, click here for a link to a PDF file showing average flows from Russia to major destinations over four weeks.
–With assistance from Sherry Su and Grant Smith.
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